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24–802 PDF 2006

S. HRG. 109–228

SAVING DOLLARS, SAVING LIVES: THE IMPORTANCE OF PREVENTION IN CURING MEDICARE

HEARING

BEFORE THE

SPECIAL COMMITTEE ON AGING 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

WASHINGTON, DC

JUNE 30, 2005

Serial No. 109–11

Printed for the use of the Special Committee on Aging

(

SPECIAL COMMITTEE ON AGING 

GORDON SMITH, Oregon, Chairman 

RICHARD SHELBY, Alabama 

SUSAN COLLINS, Maine 

JAMES M. TALENT, Missouri 

ELIZABETH DOLE, North Carolina 

MEL MARTINEZ, Florida 

LARRY E. CRAIG, Idaho 

RICK SANTORUM, Pennsylvania 

CONRAD BURNS, Montana 

LAMAR ALEXANDER, Tennessee 

JIM DEMINT, South Carolina 

HERB KOHL, Wisconsin 

JAMES M. JEFFORDS, Vermont 

RUSSELL D. FEINGOLD, Wisconsin 

RON WYDEN, Oregon 

BLANCHE L. LINCOLN, Arkansas 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

BILL NELSON, Florida 

HILLARY RODHAM CLINTON, New York 

CATHERINE FINLEY, Staff Director 

JULIE COHEN, Ranking Member Staff Director 

(II) 

C O N T E N T S 

Page 

Opening Statement of Senator Herb Kohl ............................................................. 1

Opening Statement of Senator Gordon Smith ....................................................... 3

Opening Statement of Senator Ron Wyden ........................................................... 4

PANEL I 

Douglas Holtz-Eakin, director, Congressional Budget Office, Washington DC .. 5

PANEL II 

Dr. William Evans, director of Nutrition, Metabolism, and Exercise Laboratory, Donald W. Reynolds Institute on Aging, University of Arkansas for 

Medical Services, Little Rock, AR ....................................................................... 33

Bill Herman, vice president of Human Resources, Highsmith, Inc., Fort Atkinson, WI .................................................................................................................. 41

Stephen J. Brown, president and CEO, Health Hero Network, Inc., Mountain 

View, CA ............................................................................................................... 46

Steven H. Woolf, professor, Departments of Family Medicine, Epidemiology 

and Community Health, Virginia Commonwealth University, Fairfax, VA ... 72

APPENDIX 

Prepared Statement of Senator James Talent ...................................................... 95

Questions from Senator Blanche Lincoln for Mr. Evans ...................................... 95

(III) 

(1)

SAVING DOLLARS, SAVING LIVES: THE IMPORTANCE OF PREVENTION IN CURING 

MEDICARE 

THURSDAY, JUNE 30, 2005 

U.S. SENATE, 

SPECIAL COMMITTEE ON AGING, 

Washington, DC 

The committee met, pursuant to notice, at 10:03 a.m., in room 

SH–216, Hart Senate Office Building, Hon. Herb Kohl, presiding. 

Present: Senators Smith, Talent, Kohl, Wyden, and Lincoln. 

OPENING STATEMENT OF SENATOR HERB KOHL 

Senator KOHL [presiding]. This hearing will come to order, and 

we welcome you all here today, where we will explore ways to contain growth in Medicare spending by helping seniors lead healthier 

lives. 

As always, we thank our Chairman, Senator Gordon Smith, for 

working with us in a bipartisan manner to examine issues affecting 

seniors. It is not secret that the Federal Government will face fiscal 

challenges as the Baby Boomers begin to retire and become eligible 

for Medicare. 

From the year 2000 to 2030, the number of people on Medicare 

will nearly double from 40 million to 78 million. In fact, in the next 

25 years, Federal spending on Medicare, Medicaid, and Social Security will almost equal what we now spend on the entire Federal 

Government. 

So we know these costs are looming and yet our nation remains 

woefully unprepared. Net Federal spending on Medicare was more 

than $300 billion in 2004. But what many people don’t know is that 

a small share of Medicare beneficiaries account for a very large 

share of total Medicare spending. 

Just 10 million of the 40 million Medicare beneficiaries account 

for 85 to 90 percent of the program’s costs every year. 

As we will hear today, much of this spending is for patients suffering from multiple chronic diseases. Studies show that Medicare 

spends 2 out of every 3 dollars on people with five or more chronic 

conditions, such as diabetes, emphysema, heart disease, arthritis, 

or osteoporosis. 

These chronic conditions are largely preventable, treatable, and 

their onset can often be delayed through proper nutrition and exercise. At a time when our nation is growing older, it is clear that 

the successes we have in preventing chronic diseases will directly 

affect our ability to contain future growth in Medicare spending. 

2

We need to get the word out that prevention is not something 

that only children and younger adults can benefit from. Seniors 

need to understand that it is never too late to benefit from a 

healthier lifestyle. 

It is also important to note that this not just a challenge for the 

Federal Government. Rising health care costs will continue to be 

an issue for all American families and businesses, and so we need 

more prevention, nutrition, and exercise by younger generations 

also. 

Today, we will hear from Bill Herman from Highsmith, Incorporated, a company in Fort Atkinson, WI, on their award-winning 

prevention programs to keep their employees healthy and their insurance costs low. 

This makes sense for businesses, but also for our country, for, 

after all, unless we find a way to prevent and treat chronic diseases early on, Medicare will inherit even more costly problems as 

more people join the program. 

I am pleased to have the director of the Congressional Budget 

Office here today to present CBO’s recent report on Medicare HighCost Beneficiaries. 

We also look forward to hearing from our second panel of witnesses who will discuss ways to successfully prevent and affordably 

treat chronic diseases. 

In particular, we need to find ways to educate seniors and 

boomers that it is never too late to change their lifestyle and improve their health and improve Medicare’s finances at the same 

time. 

We need to make sure that seniors know about the preventive 

benefits that Medicare offers and why they are so important to 

take advantage of. 

We should look for ways to use technology to give seniors and 

health providers more tools to take control of their health. 

We know that many of the Senators on this committee share this 

concern for skyrocketing costs of health care, particularly Medicare. 

We know that we will all take away some good recommendations 

from today’s hearing, and continue working together to stem this 

growing problem. 

So, again, we thank everyone for their participation here today, 

and now turn to our Chairman, Gordon Smith, for his opening remarks.

3

OPENING STATEMENT OF SENATOR GORDON H. SMITH, 

CHAIRMAN 

The CHAIRMAN. Thank you, Senator Kohl, and thank you for arranging this hearing on such a vital topic. Today’s hearing is, as 

he has stated very well on the importance of prevention in helping 

to slow the growth of Medicare spending. We have two excellent 

panels of witnesses today, and I will look forward to a productive 

discussion. 

Over 40 million elderly and disabled Americans rely on Medicare 

for their health care coverage. In 2004, total Medicare spending exceeded $300 billion and is expected to grow significantly in the 

coming decades as the Boomer Generation approaches retirement. 

With this impending challenge, we must find ways to control the 

growth of Medicare spending if we are to preserve this critically 

important part of our health care safety net for our seniors and the 

disabled. 

It is vital that we identify where spending is the greatest under 

Medicare and develop comprehensive strategies in which to lower 

expenditures in these areas. A May 2005 Congressional Budget Office report, which this hearing will examine, may have identified 

one such area. According to the report, a relatively small group of 

high-cost Medicare beneficiaries account for a large share of the 

program spending. 

According to CBO, only 10 million of the 40 million Medicare 

beneficiaries account for 90 percent of the program’s cost. 

Further, three-quarters of these 10 million high-cost beneficiaries 

suffer from multiple chronic diseases, such as diabetes, emphysema, heart disease and stroke, arthritis, and osteoporosis. 

Such diseases require extensive care and often serve as the catalyst for many other conditions and ailments. Many of these chronic 

conditions are preventable through a regimen of proper nutrition 

and exercise. 

Additionally, the cost of treating these conditions can be significantly reduced by the implementation of chronic disease management programs. 

That is why this hearing will also examine some innovative technologies currently being used by institutional health care providers, 

such as the Veterans’ Administration, to monitor and manage high 

cost patients more efficiently. Our ability to prevent and affordable 

treat chronic disease is key to our ability to contain the anticipated 

growth in Medicare spending. 

So I thank all of our witnesses for coming today to discuss this 

issue, and look forward to the testimonies. Thank you. 

Senator KOHL. Thank you very much. Senator Smith, we also 

have with us the other Senator from Oregon, Ron Wyden.

4

OPENING STATEMENT OF SENATOR RON WYDEN 

Senator WYDEN. Thank you very much. I want to commend both 

of you. I think this is an excellent topic, and I thank you, both, for 

your leadership. 

What I think is so striking about this is that for all practical purposes the Federal Government doesn’t run health care programs. 

What the Federal Government does is run sick care programs, and 

probably nothing shows it more graphically than the topic that we 

are going to examine today under the leadership of my two friends 

and colleagues. 

The Federal Government is going to spend a boatload of money 

for what is essentially a chronic care program. That is what Medicare has become today, and that is what Mr. Holtz-Eakin and his 

capable folks document, you know, once more. 

What is so striking is that if you look at the two parts of Medicare, Part A of Medicare will pay an astounding sum for essentially 

institutional care. What Senator Smith and I see in our state is essentially the insurance carrier that runs Medicare for our state will 

write out a check for $40,000, $50,000, some prodigious sum of 

money, for a seniors hospital coverage under Part A, and then 

there will be very little spent on prevention under the outpatient 

portion of Medicare Part B. 

Senator Kohl is absolutely right. There is a little bit of coverage. 

We got to do a better job of getting the word out about those preventive benefits under Part B. I really hope that as we work together on a bipartisan basis and have the very valuable assistance, 

Mr. Holtz-Eakin, that we can essentially revamp this program. Let 

us do a better job of targeting the resources where they are most 

needed, which is essentially what Senator Kohl and Senator Smith 

have said in terms of chronic care, and then let us do a better job 

of prevention so that we are not always playing catch-up ball under 

Part A when somebody is flat on their back in the hospital. 

I want my two colleagues to know that as part of the bipartisan 

legislation that Orrin Hatch and I have written, the Health Care 

that Works for All Americans Act, which, in effect, will kick in this 

October when the information about health care spending goes online, and we start walking the country through the choices, that I 

really want to see that law follow up on the good work that you 

have done, Senator Kohl and Senator Smith. It is an important 

hearing. Thank you, both, Senators. Mr. Holtz-Eakin has worked 

with my office on a variety of issues, and we appreciate all his cooperation as well, and I look forward to the testimony. 

Senator KOHL. Thank you very much, Senator Wyden. 

We are pleased to welcome our first witness, Dr. Douglas HoltzEakin, director of the Congressional Budget Office. 

Dr. Holtz-Eakin was appointed to a 4-year term in 2003; previously served for 18 months as chief economist for the President’s 

Council on Economic Advisors, where he also served as the senior 

staff economist in 1989 and 1990. 

So we are very pleased that you are here, and we welcome your 

testimony.

5

STATEMENT OF MR. DOUGLAS HOLTZ-EAKIN, DIRECTOR, 

CONGRESSIONAL BUDGET OFFICE, WASHINGTON, DC 

Mr. HOLTZ-EAKIN. Well, thank you, Senator Kohl. Thank you, 

Chairman Smith, Senator Wyden. 

I am pleased that the CBO could be here to talk about our report, and this important issue. The starting point, as has already 

been mentioned by both the Chairman and Senator Kohl is the concentration of Medicare spending among a very few beneficiaries. 

In 2001, the data in the report show that 25 percent of the beneficiaries accounted for 85 percent of Medicare spending. It is useful 

to note that this is not unique to Medicare. National health spending has the same character, actually a bit more concentrated. This 

is the kind of pattern one would expect in an insurance program, 

where a relatively small number of claimants in any year would account for the bulk of the spending. 

But it does raise some questions and possibilities. First, of 

course, is, ‘‘Can we save some Medicare costs in examining this?’’ 

Is it possible that these are always the same people? I mean, we 

use 2001, but could it be the same people every year; and if so, is 

there a way to address their health so that they are either less expensive to begin with or are less expensive to Medicare in the future in some way. 

The report tries to take a look at this. The second figure that we 

look at examines the question of whether these are, in fact, the 

same people put differently, is there some persistence in these expenditures from year to year? 

What we do is try to track the high cost Medicare beneficiaries, 

those in the top 25 percent, over time. The graph that we have in 

front of you and is on the screens shows the high-cost folks in 1997, 

and then looks back a few years to what they were costing before 

that, and then follows them for years after 1997 up to 2001 to see 

what the expenditure looks like. 

The dark bar represents this group, and what you can see is that 

it ramps up prior to 1997. They were high cost in 1997, but they 

were accelerating in their costs prior to that, and then ramping 

down past 1997. This is consistent with a pattern that you would 

expect—one in which there are some acute care expenses. Someone 

breaks a leg and has an episode of high costs, but it goes away. 

Another part of the mixture is chronic, ongoing expenditures for 

the kinds of chronic care they might require. It is also important 

to note a key feature of the post–97 experience, which is the large 

fraction of these beneficiaries who are close to death, and indeed 

die in the years thereafter. That pattern is consistent with about 

25 percent of the spending each year that goes to those in the last 

year of life. 

Now, where are these costs coming from? If we go to the third 

figure, they are coming from the fact that, while these high-cost 

beneficiaries do the same things that other people do—they go to 

the doctor, for example—they are much more likely to do other 

things—go to the emergency room, have a hospital admission, or be 

in a skilled nursing facility. Regardless of which of those things 

they are involved in, they tend to use more services at the same 

time. So they have a greater propensity to have all those events 

than in the population as a whole. 

6

This raises the question, could we identify these individuals and 

prevent in some way, either their entry into these expensive episodes or lower the utilization given that you might have an entry. 

One issue we addressed in our report—and I won’t go into it—

is sort of whether you could just look at them on the basis of their 

demography and say these are likely to be the high cost folks. The 

answer is pretty much no. Although they are a bit older, they don’t 

stand out in any other particular way. 

If you look at their health, however, a key feature is the presence 

of chronic conditions, particularly multiple chronic conditions, 

where compared to the typical population, 75 percent have one or 

more chronic conditions versus about 40 percent in the rest of the 

population. About half of them have two or more for sure. 

So that does stand out. So that becomes one of a series of illustrative strategies that we used in the report to see if we could identify high-cost Medicare beneficiaries. That is the final slide, where 

we took three that we thought of as stylized strategies that one 

might undertake to pick out who is going to be expensive in the 

future. Take a person who has multiple chronic conditions and then 

see how they turn out. Look at someone who has had a hospital 

admission and then track them. Or look at someone who is simply 

very expensive in the beginning year and see if they continue to be 

expensive in the years thereafter. 

What the slide shows is a comparison of those groups versus a 

random sample of Medicare beneficiaries. We look at them in initial year, 1997; identify them using one of these strategies; and 

then see if we could predict that they would be more costly in the 

years to come on the basis of that identification. 

Indeed, to some extent, this appears to be the case. It is suggestive that this kind of strategy might be successful in identifying 

high-cost beneficiaries. 

Compared to the control group, each has greater spending certainly in the base year, but also in subsequent years. For those 

who get admitted to the hospital or who are expensive, you see a 

bigger drop off. For those who have the chronic conditions, their 

spending drops off less. It tends to stay elevated in the years thereafter. 

Now, the final question, of course, is whether this would allow 

the Medicare program to somehow control their costs in the future, 

and there it raises the hope that something like a disease management program might be successful in reducing overall costs. We 

can come back to this in the discussion later, but I think that the 

things that I would note at this point are that disease management 

means different things to different people. There is a variety of different elements of either education or patient monitoring and, thus, 

practice, or care coordination, or case management. So exactly 

what goes into disease management is not always the same. It is 

worth investigating that. 

Asking whether it works is really a question of first comprehensively measuring costs over the entire future of a patient’s experience and comparing that to a comparable patient without the disease management. That is a high scientific standard. None of the 

work that we have examined to date meets exactly that standard 

7

and at each point stepping down the standards, you have to ask 

whether we have got the evidence we need. 

Then finally, even if this strategy works, the important issue for 

this committee is a tradeoff in costs. It may be the case that some 

sort of preventive disease management program will work for 

Medicare beneficiaries—in the sense that it will lower costs other 

than what they would have been—but it will be costly to identify 

the people who enter into such a program out of large population 

of seniors. The question is whether it is cost effective in both 

senses. You may spend so much finding the folks that will ultimately benefit from disease management that you overwhelm any 

cost saving you would get from putting them in the program. 

Those are the two elements of the decision, and that is the difficult design issue that would face someone trying to put this into 

place in the Medicare population as a whole. 

So we are pleased to be here. That is the high speed overview 

of the report. I will be happy to answer your questions and pursue 

it any way you like. Thank you. 

Senator KOHL. Well, thank you. I am curious with respect to 

your opinion on the following thought: are there people who have 

some chronic conditions who use the system—and we are talking 

about them now—and to a great extent those are the ones who—

the 25 percent who cost us 85 to 90 percent of Medicare, but others 

who are seniors who have similar conditions who just do not check 

in that often, use the system that much, manage to deal with these 

problems in a way that doesn’t require them to be so involved with 

Medicare? 

Mr. HOLTZ-EAKIN. There are certainly those who would have one 

of our list of seven chronic conditions. Diabetes stands out. Among 

the high cost beneficiaries are those with diabetes. However, if you 

look in the low-cost population, there are lots of folks with diabetes 

as well, three times as many, in fact. So it is not the case that if 

you are diabetic, you are automatically high cost, and it is not the 

case that if you have one of our chronic conditions, you always—

you inevitably—end up there. They are in both populations. This 

goes to the last point I made, which is that you have to be able 

to find the diabetic who will benefit from some sort of intervention 

to lower costs. 

Senator KOHL. But is it true that there may be two similar people who are seniors who have conditions that are not entirely dissimilar? 

Mr. HOLTZ-EAKIN. Oh, yes. 

Senator KOHL. One will access the system an awful lot and prove 

costly in a dollar and sense way. The other one will access the system an awful lot less and be less costly, just because they are a 

different kind of individuals. 

Mr. HOLTZ-EAKIN. Certainly, and we could probably go into the 

data that we used for this report and find people with chronic conditions and show you the averages on both sides of that observation. 

Senator KOHL. All right. Thank you. Senator Smith. 

The CHAIRMAN. Doug, I am interested in whether or not you all 

have factored in the impact of Part D, and what it might do to Part 

A expenditures? 

8

Mr. HOLTZ-EAKIN. It is not the first time this has come up, which 

is not surprising. We certainly have tried to look very closely at the 

degree to which additional therapies in the form of pharmaceuticals might lower costs elsewhere. But it is hard to get that out 

of the data for a variety of reasons. 

No. 1, the Part D really covered the costs of pharmaceuticals. 

People were taking the drugs they needed anyway in many cases, 

so you haven’t really changed their therapy in any deep way. So 

you wouldn’t expect a change in the costs. So that is sort of the 

major reason. 

The CHAIRMAN. OK. I understood in your testimony that where 

there is simply private coverage and Medicare is not involved, 

these same populations are still using those kind of resources? 

Mr. HOLTZ-EAKIN. Yes. 

The CHAIRMAN. So probably not the savings we might hope for? 

Mr. HOLTZ-EAKIN. No. 

The CHAIRMAN. OK. Do you believe there is any benefit to comparing data from Medicare managed care plans that employ chronic disease management programs with the data you have compiled 

for the fee-for-service programs? Are the Mr. Holtz-Eakin. It is 

hard to imagine that it wouldn’t be valuable to compare them as 

long as you were careful about the comparisons. You know the key 

issue is what constitutes the same kind of group going in, and 

given that the people who chose to go into the managed care versus 

the fee-for-service do so voluntarily, they are, by definition, not 

identical. They have chosen differently, and so you have to somehow get a handle on that before you start doing comparisons across 

the groups. 

Senator KOHL. Senator Wyden. 

Senator WYDEN. Thank you, Mr. Chairman, and I want to thank 

Dr. Holtz-Eakin for excellent testimony. 

I am curious what CBO has in terms of numbers as it relates to 

spending on health care in the last 6 months of an individual’s life. 

You know there are constantly studies, you know, thrown around 

on this point, and I am wondering, you know, what, if anything, 

CBO uses as statistical documentation on that point? 

Mr. HOLTZ-EAKIN. We rely on the Medicare claims data, so it 

would be among those folks. For the numbers I have for this hearing, we can try to see if there is more detail in the last 6 months 

or for the last year. Twenty-five percent of Medicare spending is in 

the last year of life ballpark. So it is a fairly substantial sum. 

It is, of course, one of those backward looking computations in 

that you don’t know when the last year of life will be necessarily. 

But looking back, those are the facts. 

Senator WYDEN. That will be an area I want to follow up with 

you on as well for the Citizens’ Health Care Working Group because those issues, of course, were tough before the Terry Schiavo 

case. They are now infinitely harder and my hope is that we can 

find some common ground. Senator Smith and I have introduced 

bipartisan legislation, the Conquering Pain Act, to try to create 

some options for folks, but we will be anxious to work with you on 

that. 

I wanted to also explore with you a topic you and I have talked 

about. Senator Sununu and I have been concerned about the fact 

9

that public programs, programs like Medicaid, the Public Health 

Service, the VA, are paying for prescription costs, you know, advertising. In effect, those programs end up getting shellacked, you 

know, twice. There are tax breaks for the pharmaceutical folks to 

advertise on TV. Nobody is quarreling with that, trying to take it 

away. But after that expenditure is made with taxpayer money, 

then more money gets spent for in effect like Medicaid to pay for 

all those purple pills, you know, dancing across everybody’s television set. So we are trying to address this issue and obviously advertising increases utilization of prescription drugs and, of course, 

the program. 

Let me ask it this way: The official sources on drug advertising seems to be that the country spends between $3 billion and $5 billion a year on prescription drug advertising. According to the bipartisan experts, after the Medicare drug benefit kicks in, Medicaid is 

expected to be about 10 percent of the prescription drug market. 

That seems to be a kind of consensus recommendation. 

So Senator Sununu and I are interested and working on the language of this and would very much like your counsel so as to focus 

on utilization and focus on market share. It is our sense that if we 

do that, the government could save about $300 million to $500 million a year on Medicaid, in effect over a billion dollars over a 5-

year period. 

Do you feel that that is essentially a reasonable kind of analysis? 

Mr. HOLTZ-EAKIN. Yes, given that the language was tight 

enough, that it could find a way to actually recoup the costs, and 

that we can, you know, get a sense that the numbers are on the 

mark. They certainly seem reasonable. Yes. 

Senator WYDEN. Well, I appreciate that, and I would like to work 

with you on the language because I know that the way it is framed 

so as to focus on utilization and market share is really, really key, 

and if we could follow up with your technical folks. They have been 

very helpful to us already. This is a bipartisan bill, and I just point 

it out because we have Chairman Smith here, and he has done excellent work on the Medicaid program. He is trying to get $10 billion worth of savings without hurting people on Medicaid, and I 

would just like to make it clear for the record that Dr. Holtz-Eakin 

has said we could get more than a 10 percent of the savings in the 

target that Chairman Smith is looking at by the advertising provisions along the lines of what Senator Sununu and I have been talking about. So we will be anxious to follow up with you, and we got 

to figure out how to save $10 billion on Medicaid, and we all want 

to do it without hurting people. We just on the record a way to in 

the ballpark to get 10 percent of the money. That is what we ought 

to be trying to do is sharpen our pencils. 

Chairman Kohl, I thank you for this, and Dr. Holtz-Eakin for all 

his analysis. 

Mr. HOLTZ-EAKIN. Thank you. 

Senator KOHL. Thank you, Senator Wyden. We also have with us 

this morning Senator Blanche Lincoln from Arkansas. Senator Lincoln. 

Senator LINCOLN. Thank you. A special thanks to Senator Smith 

and Senator Kohl. They have been tremendous leaders in the 

Aging Committee, helping us focus on the important issues that 

10

face this country, both financially as well as for all us emotionally 

because one of these days we are all going to be old. We are all 

aging, and we are grateful to both of you. 

Mr. Holtz-Eakin, we should have you as an honorary member of 

the committee. We have heard from you a great deal, and we certainly appreciate all the work that you at CBO have done in helping us realize that we can do a better job in administering these 

programs, particularly for these high-cost beneficiaries. 

I would urge you to take a look at legislation I have been working on as well, S. 40, and would appreciate getting any help with 

scoring it. I would love to work with CBO on a way to ensure that 

a new Medicare benefit for geriatric assessment and chronic care 

management of individuals with multiple chronic conditions would 

save money to the program. I know in my own personal experience 

with my father who went through a long period with Alzheimer’s, 

Disease with other diagnoses, I saw how important it was to have 

coordination of all the medical professionals, in treating his multiple chronic diseases. Fortunately for us in Arkansas, we have the 

Don Reynolds Center on Aging, which focuses on patients with 

multiple chronic conditions and management of chronic illnesses, 

which makes all the difference in the world. My constituents see 

a difference when they go from visiting six or seven different 

health care providers to a care team that manages all of these 

chronic diseases together. 

You said in your report that reducing spending among the highcost beneficiaries would ultimately rest on the ability to devise and 

implement effective intervention strategies, clinical or otherwise, to 

change beneficiary use of medical services. I think that by giving 

an individual a geriatric assessment, which assesses a person’s 

medical condition, functional and cognitive capacity, primary caregiver needs, and environmental and psycho-social needs would go 

really a long way toward reducing some of the unnecessary and expensive medical services. 

I just wanted to see what you thought about that in terms of the 

research that you have done. Would that assessment be beneficial 

and could it be helpful to us in saving financial resources? 

Mr. HOLTZ-EAKIN. It is on the list of appealing strategies that 

comes up all the time, and in that regard it always falls to me to 

throw a little cold water on some of the hopes. The first is that in 

many cases you could not see lower costs, but it would still be 

worth it. You know, you are paying more and people have better 

health for longer periods and function better in their lives. That is 

not a cost saving issue, but it is still a good step. 

Then the second caveat I am compelled to offer is that there isn’t 

any systematic evidence to date that we can, in any broad way, get 

a lot of savings out of the Medicare population from this. That 

doesn’t mean that it isn’t true. It means that, to the extent that 

researchers have gone and looked at to the best of their ability 

groups with and without these kinds of checkups or other services, 

you can’t find a compelling scientific case that the costs are lower 

for the group where you have undertaken the new treatments. 

There are lots of reasons why that might be the case, and I would 

be happy to work with you on that. 

11

But it is largely the difficulty in setting a high scientific bar in 

a very difficult area. Most of the studies just really aren’t conclusive enough to feel confident that I could say to you, ‘‘Yes, this is 

a great idea and you will save a lot of money.’’

Senator LINCOLN. Mm hmm. Well, I am not necessarily saying 

that we have got to save all the money in that category, but if we 

can do something that actually does help us in terms of better use 

of our resources and providing better care, it seems to me it is a 

no brainer that it is something we should certainly be looking at. 

So you are saying that there is no conclusive studies that show 

that not only assessments but also the new medical physical in the 

Medicare program, are cost effective. Is that what you are saying? 

Mr. HOLTZ-EAKIN. Yes. 

Senator LINCOLN. You don’t feel like those produce some cost 

benefit? 

Mr. HOLTZ-EAKIN. There are two levels to it, and I will give you 

a longer answer than you deserve for that reason. 

The first is just at the level of the economics. Does it save 

money? That is the kind of question where the research is inconclusive at this point because it is difficult to actually do the experiment you would like, which is give some people the checkup, exactly identical people don’t get the checkup, and then track their 

health care costs from that point forward to the end of their lives. 

Then just compare the two. That is just not doable. 

So there are a whole series of halfway houses in which the scientists live that are short of that. They try to extrapolate from 

their experience to that experiment that we can’t do, and that is 

just simply hard to do. 

So the research, which we tried to survey pretty carefully in a 

letter we wrote to then Senator Don Nickles, was really about how 

difficult this is—to conclusively decide whether it will save money. 

So that is No. 1. 

No. 2 is, Will it show up on the Federal budget? If this is really 

a good thing and it is saving money, it could be that people are 

doing it already. If you then put it into the Medicare Modernization 

Act, all you do is then cover the cost of it. You put the cost on the 

Federal books, but you don’t get any of the savings because they 

were doing it anyway. So the answer is a mixture of those two 

things. One, would it really lower total economic costs in the health 

system? Two, would those costs show up in lower Federal outlays? 

That is why it is difficult to give really definitive answers in this 

area for things that are otherwise very appealing ideas. 

Senator LINCOLN. Thank you, Mr. Chairman. 

Senator KOHL. Thank you, Senator Lincoln. Dr. Holtz-Eakin, before we let you go, you are the director of CBO, so would you place 

this into context versus Social Security, the costs for which we do 

not have any sources of revenue over the next 50 years, one versus 

the other. It is our understanding that there is no comparison in 

terms of Medicare versus Social Security. Would you put that into 

context? 

Mr. HOLTZ-EAKIN. Certainly. There is no comparison, and I have 

told many people that it is my job to say apocalyptic things about 

our fiscal outlook in public, and this is really how it sizes up. Right 

now we spend about four cents on a national dollar on Social SecuVerDate 0ct 09 2002 13:17 Jan 13, 2006 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 H:\DOCS\24802.TXT SAGING1 PsN: JOYCE
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rity, a bit above. We spend about four cents on our national dollar 

on Medicare and the Federal share of Medicaid. So they are about 

even right now. If we repeat the experience of the past 3 decades, 

over the next 50 years, and we layer in the demographics, Social 

Security will rise from 4 to about 61⁄2 cents. Medicare and Medicaid 

will rise from 4 to 20 cents or the current size of the Federal Government. It is not even close. The great spending pressures are in 

the health programs. 

Senator KOHL. So of all the problems fiscally that we are facing 

in terms of Medicare, Medicaid, Social Security, this Medicare-Medicaid is clearly the big elephant, the 800-pound gorilla? 

Mr. HOLTZ-EAKIN. They are certainly the big Federal dollars and 

they reflect the underlying growth of health care costs in the 

United States. It is not just the programs. It is the underlying 

health care system as a whole. 

Senator KOHL. That is dramatic. Well, we thank you so much for 

being here. You have been really important to this Committee, and 

your experience and knowledge is invaluable, and we look forward 

to continue to work with you. 

The CHAIRMAN. Mr. Chairman? 

Senator KOHL. Yes. 

The CHAIRMAN. May I ask one other question. In light of that 

and as we try to wrestle with how we get additional revenues or 

how we find a way to meet this obligation, the population that is 

using so much of the resources currently are any of these chronic 

conditions the result of personal choices that lead them to this, 

that would warrant that they bear some greater portion of their 

own co-pay or something like that? I mean 

Mr. HOLTZ-EAKIN. The seven we looked at, I will just run down. 

The CHAIRMAN. OK. 

Mr. HOLTZ-EAKIN. You know, they are asthma, obstructive pulmonary disease, renal failure, congestive heart failure, coronary artery disease, diabetes, and senility. 

The CHAIRMAN. I am thinking of smoking. I am thinking of you 

know some people would say alcoholism is not a choice. It is a disease in itself. But a lot of these conditions, not all of them, are 

taken on by people’s individual choices and that is not fair to everyone else who is making the right kind of health choices. 

Mr. HOLTZ-EAKIN. Certainly, lifestyle figures in many of these 

chronic conditions. I think that is clear. It is not the sole determinant. But it certainly figures in that, and the degree to which 

those lifestyles are altered as a matter of choice would alter these 

outcomes. 

The CHAIRMAN. Well, it seems to me people do respond to incentives, and if there is an additional incentive to lifestyle choices that 

like smoking, I would just I find it repulsive to say to everyone else 

who is making the right choices, you have got to pay for everybody 

making the wrong choices, and I don’t know. I am just thinking out 

loud. 

Senator LINCOLN. Can I add something to that? 

The CHAIRMAN. Yeah. 

Senator LINCOLN. That is why I think the screening is so important, because if it is something like alcoholism, the earlier the 

screening and the earlier the diagnoses, the treatment is less costVerDate 0ct 09 2002 13:17 Jan 13, 2006 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 H:\DOCS\24802.TXT SAGING1 PsN: JOYCE
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ly. So it would seem that the screening and the other things that 

I think are so important, you are saying that there is not a scientific ability to be able to figure out what the cost savings would 

be for that, but I mean just commonsense tells you that if you can 

treat an ailment earlier, you can diagnose and treat it earlier, then 

the long-term costs are not going to be as much. 

But I understand your side. I am married to a research physician, so I know there are scientific things that you have to use, but, 

still, I think commonsense plays a little bit in what we decide. 

Mr. HOLTZ-EAKIN. I am economist by training. I left commonsense behind. I am an incentives guy. 

Senator KOHL. Again, just to put this thing it its context, would 

you agree that looking ahead at our fiscal condition, as the director 

of CBO, perhaps the single most important challenge we face is 

Medicare and trying to contain its projected cost? 

Mr. HOLTZ-EAKIN. Yes. I think that the rising cost of health care 

is the single most important domestic challenge the United States 

has today. It is very simple. 

Senator KOHL. Thank you very much. 

Mr. HOLTZ-EAKIN. Thank you. 

[The report follows:]

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Senator KOHL. We will now call our second panel. The first witness on the second panel is from Arkansas, and so we would like 

to recognize Senator Lincoln to introduce her constituent. 

Senator LINCOLN. Well, thank you, Mr. Chairman, and as our 

panelists are taking their seats, I have a real pleasure today to introduce Dr. William J. Evans, who is director of the Nutrition, Metabolism, and Exercise Laboratory in the Donald W. Reynolds Institute on Aging at the University of Arkansas for Medical Sciences, 

UAMS, where he is also a professor of geriatric medicine, physiology, and nutrition. 

Dr. Evans, I just have to say I routinely bring up the Don Reynolds Institute on Aging and UAMS in this Committee and in the 

Finance Committee, so I am so pleased that I now have a representative from there who can speak to the tremendous work 

that’s going on in terms of the dealings with multiple disease diagnosis and coordination of care. 

Dr. Evans is also a research scientist in the Geriatric Research, 

Education, and Clinical Center in the Central Arkansas Veterans’ 

Health Care System. He is author or co-author of more than 190 

publications and scientific journals. His research has examined the 

powerful interaction between diet and exercise in elderly people. 

Along with Dr. Erwin Rosenberg, Evans is the author of Biomarkers: The Ten Determinants of Aging That You Can Control, and the 

author of Astrofit. 

His work has been featured in numerous newspapers, including 

the New York Times, the Boston Globe, the Chicago Tribune, as 

well as the CBS Evening News, CBS Morning Show, 20/20, CNN, 

and the PBS Series, the Infinite Voyage. 

His landmark studies have demonstrated the ability of older men 

and women to improve strength, fitness, and health through exercise, which we all want information for, even into the 10th decade 

of life. I am not sure that he has met my husband’s grandmother, 

who is 108 this year, living out in Parkway Village, Dr. Evans, so 

she is a great one to consult. 

Dr. Evans receives grant support from the National Institute of 

Health, the Veterans Administration, NASA, private industry, and 

other sources. He is a fellow of the American College of Sports 

Medicine, and the American College of Nutrition, and an honorary 

member of the American Dietetic Association. 

I am enormously proud to be here to introduce you to Dr. Evans 

and to share your wealth of knowledge with this Committee and 

I thank the Chairman and the two Senators here, Chairman Smith 

and Chairman Kohl. 

Dr. Evans. Thank you Senator Lincoln. It is a real honor and 

pleasure Senator Kohl. Thank you, and we will just go through it, 

and then we will get to your testimony. 

Senator LINCOLN. Oh, good. 

Senator KOHL. Our next will be Bill Herman who is vice president of Human Resources at High Smith in Fort Atkins in Wisconsin. 

Highsmith has been nationally recognized for its innovative employee wellness programs, and so we are pleased that Mr. Herman 

is here today to share the keys to the success of his company. 

Thank you so much for being here. 

33

Senator Smith, would you like to welcome your guest? 

The CHAIRMAN. Thank you, Mr. Chairman. It is my privilege to 

welcome our next witness as well, Mr. Stephen J. Brown, president 

and CEO of Health Hero Network, founded in 1988. His company 

is a recognized leader in the development and implementation of 

innovative technologies used to monitor or manage traditionally 

high-cost patients. 

Their technology is currently being used by a number of institutional health care providers, including the Veterans’ Administration, to more efficiently manage patients with heart failure, pulmonary cardiovascular disease, diabetes, asthma, post acute care, 

mental health, and many other chronic conditions. 

Additionally, Health Hero Network and Bend Memorial Clinic in 

Bend, OR, are partnering to see how this technology can be used 

to coach and monitor Medicare patients with severe chronic illness 

and prevent them from going to the hospital and developing further 

complications. 

So we thank you, Stephen for being here, and I look forward to 

hearing more about your technologies. 

Senator KOHL. Our final witness on this panel will be Dr. Steven 

Woolf, professor of the Departments of Family Medicine, Epidemiology, and Community Health at Virginia Commonwealth University. 

Dr. Woolf’s career has focused on preventive medicine, and he is 

a senior advisor to the Partnership for Prevention. 

We welcome you all, and Mr. Evans we will start with your testimony. 

STATEMENT OF DR. WILLIAM EVANS, DIRECTOR OF NUTRITION, METABOLISM, AND EXERCISE LABORATORY, DONALD 

W. REYNOLDS INSTITUTE ON AGING, UNIVERSITY OF 

ARKANSAS FOR MEDICAL SERVICES, LITTLE ROCK, AR 

Dr. EVANS. Thank you very much. It is a real honor to be here. 

I am in only the second department of geriatrics in the United 

States, which is an indication of the relative lack of attention toward geriatrics in this country, and it is only now changing, and 

so we are very fortunate to be in this wonderful new center. 

As we know, attitudes toward aging have been around a very 

long time. As Shakespeare describes the ages of man, he says the 

second childishness and mere oblivion, sans teeth, sans eyes, sans 

tastes, sans everything. 

This attitude toward aging I think is now beginning to change. 

I think we are at the beginning of a revolution in how we think 

about aging, because for the first time, we can actually separate 

what is biological aging from how we go about living our lives, as 

we have just talked about. 

One of the features of aging we know is a loss of muscle. We 

think that that is critical. These are data from the Baltimore Longitudinal Study on Aging. The yellow line happens to be loss of 

muscle. This is a lifelong process. We have coined a term for it. We 

call it sarcopenia, and that simply means the age-related loss of 

skeletal muscle mass. 

We think that this is an enormous problem. It leads to reduced 

protein reserves, the decreased ability of elderly people to respond 

34

to stress, decrease strength and functional capacity, leading to 

frailty and falls, reduced aerobic capacity, and reduced needs for 

calories. 

Recently, health care costs directly attributed to sarcopenia have 

been estimated. There is enormous prevalence of this problem: 

greater than 20 percent of people over the age of 65 suffer from 

sarcopenia. In the year 2000, sarcopenia could be attributed to 

more than $18.5 billion, which is 15 percent of total health care expenditures. That translates to an excess of $860 for each sarcopenic 

man and $933 for each sarcopenic woman. A 10 percent reduction in sarcopenia prevalence would save $1.1 

billion (dollars adjusted to 2000 rates) per year in U.S. healthcare 

costs. 

This is what sacropenia looks like. These are the cross sections 

of the thighs of two women, a 21-year-old woman and 63-year-old 

woman. You can see the astonishing and remarkable change in 

body composition, with an impressive decrease in muscle and an 

equally as impressive increase in fatness. 

Do elderly people respond to exercise? This is a study we did 

some time ago where we asked the question. We trained young and 

old people with bike exercise. Our older subjects gained more than 

20 percent of their aerobic capacity in 12 weeks. They had regained 

in 12 weeks what they had lost in 15 years. But the biggest problem we think in older people is weakness. These are data from the 

Framingham Study showing that for women between 75 and 85, 65 

percent report that they cannot lift 10 pounds, and 35 percent of 

men. That translates directly into reduced independence, decreased 

dependence on social services and other issues. 

So can we get older people stronger? The answer to the question 

is yes. The first study we did was in older men, doing just 

weightlifting 12 weeks. We were able to triple their muscle 

strength in just 12 weeks so that many of these men who were in 

their mid–60’s were not only stronger than most men of their age, 

they were stronger than they had ever been in their lives. 

We were able to show the size of their muscle increased dramatically, at 15 percent. We next looked at the ability of older women 

to respond to this type of exercise. We know that one in two women 

and one in eight men aged 50 and over will have an osteoporoticrelated fracture in their lifetime. The costs of osteoporosis are tremendous and rising. 

We did a simple study, again funded by the National Institutes 

of Health. We took post-menopausal women. We randomized them 

to an exercise group two days a week of weight lifting exercise 

versus a control group. This is what their bone density looked like. 

So the exercising women showed no age-related loss in bone in that 

year; in fact, an increase in bone density. The control group lost 

bone. If you look at the evidence of the new generation of antiosteoporosis drugs that are so expensive, none of them have an effect like this. They don’t affect other factors related to falls related 

to fracture. So this one simple intervention increased strength, increased muscle, improved balance, and increased their levels of 

physical activity. In totality, this simple exercise program has far 

greater effects of reducing risk of above fracture than any medication. 

35

Then the final studies I wanted to show you was the ability of 

very, very old people to respond to exercise. The first study that we 

did we reported in JAMA and we got a lot of press. This is a cartoon that appeared in Sports Illustrated of all places when they did 

a report on our study. 

We did that. In another study we published in the New England 

Journal of Medicine that I am going to highlight. In this study, our 

subjects range in age between 72 and 98; 69 percent were over the 

age of 85. This is a population with multiple chronic disease. These 

were nursing home patients. 

At least half of them were somewhat demented. Half of them had 

arthritis. Forty-four percent had pulmonary disease. Forty-four percent had a previous osteporotic fracture. Thirty-five percent were 

hypertensive. Twenty-four percent had a diagnosis of cancer. Sixteen percent were diabetic, and 13 percent had a myocardial infarction. They were all allowed into the study. We showed that we 

could triple their strength. We improved their balance, decreased 

the risk of falling. Their walking speed improved. Their ability to 

climb stairs improved. They were able to get up and move around 

a lot more. They told us that they didn’t need to ring for a nurse 

in the middle of the night anymore to use the toilet. They told us 

that they could get up and move around and get their meals. So 

not only can we improve their independence, but we can improve 

the quality and dignity of their life. 

Importantly, there was a significant decrease in depression in 

the group that exercised. 

So it is possible. They are quite responsive. We have a number 

of different very, very positive effects of this type of exercise that 

is enormously important and powerful. I just wanted to show a couple of statewide exercise programs that I designed. One was in 

Massachusetts, where I was a faculty member at Tufts University 

for 15 years. I designed a program for the state called Keep Moving, and every year we had an event called the Governor’s Cup for 

Seniors, and this was the line for two of the races; lots of grey hair 

in there. They love these programs. We also designed a program 

at—when I was at Penn State, called PEPPI, Peer Exercise Program Promotes Independence, which we are now implementing in 

Arkansas. It says we trained community-based peer leaders using 

the Triple A’s in Pennsylvania—very inexpensive, very effective. 

This is one of the groups in Altoona, PA. This is a newspaper that 

somebody sent me with all of the PEPPI programs that are in their 

community. Currently, there are 250 groups, with a total participation of more than 5,000. 

A recent survey of this program showed that 82 percent say they 

can walk better. Ninety-five percent are better able just to get up 

from a seated position. Seventy-eight percent say they can climb 

stairs more easily. Many of them have improved balance. 

Even more importantly, 99 percent of the participants state that 

their health has improved and 87 percent say they are more independent. 

So we hope that this will be the future of nursing homes. Finally, 

I was privileged to be at a joint press conference with Senator 

Glenn after his space flight to talk about similarities between space 

flight and aging and found a wonderful quotation that described 

36

the Senator perfectly well and also revealed that Shakespeare was 

probably a geriatrician. We know that these things can prevent debility and though I look old, yet I am strong and lusty, for in my 

youth, I never did apply hot and rebellious liquors in my blood, nor 

did not with unbashful forehead woo the means of weakness and 

debility. Therefore, my age is as a lusty winter, frosty, but kindly. 

Let me go with you. I’ll do the service of a younger man in all your 

business and necessities. 

So Senator Glen certainly is the epitome of successful aging. 

Thank you very much. 

[The prepared statement of Dr. Evans follows:]

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Senator KOHL. Thank you, Mr. Evans. Mr. Herman, tell us about 

your company. 

STATEMENT OF MR. BILL HERMAN, VICE PRESIDENT OF 

HUMAN RESOURCES, HIGHSMITH, INC., FORT ATKINSON, WI 

Mr. HERMAN. I am happy to, Senator. Good morning. 

It is a pleasure to be here. 

Like most businesses in our country, Highsmith is a small business. We are a family owned distribution company located in rural 

Wisconsin, halfway between Milwaukee and Madison. 

We have approximately 220 employees. Our customers are libraries and schools. 

Over the last 10 years, we have received a remarkable number 

of awards and a flood of national publicity for our wellness and employee development initiatives. We earned that recognition by managing our health care costs; at the same time, we improved the 

quality and productivity of our workforce. In fact, those two things 

are closely linked. But we really set out to accomplish much more. 

We set out to ensure the long-term vitality and viability of a 

growing business. 

Our response to the crisis in health care costs and health risk 

management has always served that goal. In fact, my point today 

is that wellness and employee development have been successful at 

Highsmith because we have made them a part of our business 

plan. 

We have learned the value of a well thought out strategic approach to implementing and sustaining health and wellness concepts within our organization, concepts that continue to influence 

and effect the lives of employees after they retire. Our culture is 

supportive of health lifestyle choices and encourages good nutrition 

and lifestyle activity. 

At Highsmith, wellness is not viewed as just a program, but 

rather as a strategic initiative to nurture the human capital necessary to meet corporate goals and objectives. 

Over time, we found that traditional definitions of wellness and 

health promotion often fell short of encouraging personal responsibility for health and wellbeing. 

Highsmith undertook a fundamental transformation in our view 

of wellness. We think the terms wellness and employee development are interchangeable. Engaging employees in their jobs, emphasizing learning and development, providing tools to balance 

work life responsibilities, along with health and wellness have all 

been integrated at Highsmith. 

This initiative encompasses a carefully managed blend of seven 

components: job-career development, work life enrichment, personal wellbeing, self-care, physical wellbeing, monetary incentives 

as applied to health insurance premiums, and a comprehensive 

array of benefits. 

A key piece is the monetary incentives. If an employee and 

spouse qualify for the incentive, Highsmith pays 75 percent of their 

single or family health insurance premium. If one doesn’t participate, we pay only 60 percent. The voluntary eligibility requirements to qualify for the incentive are enrollment in our health insurance plan, to be a non-user of all tobacco products, participation 

42

in our annual health screening, plus age and gender specific physical exams. 

Eighty-three percent of our employees on our health plan do participate. 

The annual health screening for employees and spouses measures height and weight, blood pressure, a carbon monoxide screen 

to determine if one smokes, a full blood lipid panel, glucose, and 

a treadmill fitness test. 

Participants also complete a coronary risk profile. The most critical part of the health screening is delivering immediate feedback 

and helping people understand it. 

There are four distinct feedback stations as part of the health 

screening. One of the stations is a focus on emotional wellbeing. 

Some of the results that we have been able to measure in the period 2000 through 2004 are we have had a 53 percent decrease in 

total participants with high-risk cholesterol levels. We have had a 

52 percent decrease in total participants with high blood pressure; 

a 72 percent decrease in total participants whose VO2 submax was 

high risk—how healthy your heart is. We have normal blood glucose levels in 84 percent of all participants. 

We have experienced an average increase in health insurance 

premiums of only 5.4 percent over the last 4 years. Employee turnover is single digit, and our average tenure is 14 years. 

Utilization of our employee assistance program was 22.8 percent 

for 2004. The national average hovers between 4 and 6 percent. 

So in conclusion, I would like to reiterate that wellness and 

health promotion is not a program at Highsmith. It is not a stand 

alone. It is really a strategy initiative to have the human capital 

necessary to meet our corporate goals and objectives. Thank you. 

[The prepared statement of Mr. Herman follows:]

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Senator KOHL. Thank you very much, Mr. Herman. 

Mr. Brown. 

STATEMENT OF MR. STEPHEN J. BROWN, PRESIDENT AND 

CEO, HEALTH HERO NETWORK, INC., MOUNTAIN VIEW, CA 

Mr. BROWN. Mr. Chairman and Committee members, I am Steve 

Brown, and I am the CEO of Health Hero Network, a technology 

company in Mountain View, CA. 

We serve people struggling with chronic illness. Our technologies 

are designed to enable caregivers to coach and monitor patients at 

home. I am going to talk about some of the commonsense things 

that Senator Lincoln talked about, and I am also going to talk 

about some of the programs we are involved with, which hopefully 

will make the CBO happy about the results as well. 

My view is that health care does not start when we are wheeled 

into the emergency room, and it does not start at the doctor’s office. 

Health care starts at home, with our own behavior and with prevention. 

Most people in Medicare have a chronic illness. For them, 

prevention means reducing the complications of chronic illness and 

living independently longer. From our work with the Veterans’ Administration, we have seen that when caregivers and patients work 

together on daily management and prevention, they can improve 

the quality of life and reduce costs. 

To illustrate this point, I am going to introduce Wally Browning 

from Huntington, WV, who recently was interviewed in his local 

paper. I included this in the written testimony. 

Wally Browning is a Vietnam veteran. He served our country in 

Vietnam, and now he is being served by the VA and by Health 

Hero Network. 

Wally has congestive heart failure, one of those high-cost, highrisk conditions that require very close attention and management. 

It is also one of the leading causes of hospital admissions for Medicare. 

Every day a nurse at the VA checks in on how well Wally is 

doing, remotely, by sending message to a device installed in Wally’s 

home, called Health Buddy, and I brought that for you to see too. 

With simple push buttons, Wally is able to answer questions that 

appear on the screen and tell his nurse how he is doing; tell his 

nurse about new symptoms transmit data about his blood pressure 

and his weight and also get feedback and coaching from his nurse 

about his condition and about his health program and about 

healthy choices that he needs to make. 

A VA nurse uses a computer with a secure Internet application 

to analyze Wally’s data every day and flag potential problems before they become worse. The result has been fewer emergencies, 

fewer stays in the hospital, greater piece of mind, and cost savings 

for the VA. As Wally puts it, after he checks in with his Health 

Buddy, he feels like he is good for another day. 

Wally is like 20 million Americans with complex chronic illnesses 

who are at risk of going to the hospital any day. Many of these hospital admissions can be prevented if we coach and monitor patients 

at home. 

47

The reason our health care system is in trouble, even though we spend nearly $2 trillion a year on it, is that we are not paying for 

the right model of chronic care. For 40 years, Medicare payment 

has been based on episodic, face-to-face encounters with a doctor, 

usually in reaction to a crisis. 

But chronic illness is not episodic. It is long-term, and it needs 

to be managed every day. 

If we want to prevent hospitalizations, we need to coach and 

monitor patients at home before a crisis occurs. 

We know it is possible because we are doing this every day 

across America for thousands of veterans. According to the VA, 

hospital admissions for patients in the program were 63 percent 

lower than for a comparison group with similar high-risk conditions. 

Last year, we worked with the Information Technology Association of America to look at the question. What if Medicare could 

achieve similar results to the VA with similar patients? The answer published by the ITAA—and that report is also in the written 

testimony—is that we would save over $30 billion a year. 

As a result of your leadership and that of your colleagues, the 

Medicare Modernization Act starts to recognize that people with 

complex chronic illness need continuity of care and prevention 

rather than more episodic crisis management. That is a major step 

forward for Medicare, and now the challenge is execution. We are 

participating in two large-scale chronic care improvement pilots authorized by the Medicare Modernization Act. We are also working 

with the American Medical Group Association and its physician 

groups, like the one in Bend, OR, to create a chronic care model 

based on coaching and monitoring patients at home, under the supervision of their primary physician. 

Part of the wisdom of the recent Medicare initiatives is in recognizing how technology can play a vital role in transforming the 

model of care for chronic illness. 

Information technologies can extend care into the home and 

coach patients to improve their own lives and change their own behavior. Caregivers can detect early and deliver the right care at the 

right time before there is a crisis. 

Health care and prevention starts at home, and the right technology can help people struggling with chronic illness and connect 

them to better care. I thank you for inviting me to testify today. 

[The prepared statement of Mr. Brown follows:]

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Senator KOHL. Thank you for being here, Mr. Brown. Mr. Woolf? 

STATEMENT OF MR. STEVEN H. WOOLF, PROFESSOR, DEPARTMENTS OF FAMILY MEDICINE, EPIDEMIOLOGY AND COMMUNITY HEALTH, VIRGINIA COMMONWEALTH UNIVERSITY, 

FAIRFAX, VA

Dr. WOOLF. Thank you, Senator Kohl, Senator Smith, other 

members of the Committee. 

My name is Steven Woolf. I am a family physician and a specialist in preventive medicine and public health. I serve as professor of Family Medicine, Epidemiology and Community Health at 

Virginia Commonwealth University. 

I am pleased to talk with you this morning about prevention and 

seniors. 

The prevention of disease is the cornerstone of healthy aging. 

The underlying logic is obvious. The major diseases that claim the 

lives of seniors and account for the rising cost of health care are 

caused largely by our health habits, such as smoking, lack of exercise, and poor diet. These behaviors account for one out of three 

deaths in the United States. 

We spend great sums on treating the complications of disease, 

and far too little on helping the public avoid getting sick in the 

first place. As Arkansas Governor Mike Huckabee has said, rather 

than building a fence at the top of a cliff, our health care system 

keeps sending ambulances to the bottom. Paying for prevention is 

a smarter use of scarce resources. 

Many seniors wrongly believe they are too old to benefit from a 

change in health habits, but the facts are that seniors live longer 

and live healthier if they abandon unhealthy behaviors, obtain recommended vaccines and receive certain screening tests that catch 

diseases early. Prevention can improve function and postpone disabilities, as we have just heard. 

Healthy again ought to begin early in life when it is more effective, but reducing risks for disease pays off at any age. 

Prevention has always been important, but is taking on greater 

urgency now when more Americans are growing older and the costs 

of health care loom large. 

At a time when we worry about how Medicare will afford these 

costs, it is a mistake to ignore the business case for prevention. 

In the face of these benefits, it is concerning that so many older 

adults in our country engage in health habits that increase their 

risk. In an average group of 100 Americans who are age 65 and 

older, 25 of the 100 are obese; 25 get no exercise; and 10 smoke 

cigarettes. 

Altogether, five million seniors in this country smoke cigarettes. 

Obesity rates are climbing, and the averages I am quoting for 

America’s seniors obscure higher rates of risk factors among subgroups, such as African Americans, Hispanics, and Native Americans. 

Millions of seniors have not received recommended vaccines. For 

example, one out of three have not received the pneumococcal vaccine, which helps prevent deaths from pneumonia. Congress has 

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73

ices under Medicare, thereby, removing a major barrier to access. 

The Medicare Modernization Act in 2003 introduced the Welcome 

to Medicare visit and expanded coverage for cardiovascular and diabetes screening. Yet, we see that Medicare coverage by itself does 

not make it happen. 

The GAO found that only 10 percent of beneficiaries had received 

five cancer tests and immunizations that are covered under Medicare. 

The problem is worse among beneficiaries who are poor or among 

minorities. For example, whereas the proportion of Medicare beneficiaries who have received a recent flu shot is 67 percent for 

Whites, it is 53 percent for Hispanics, and 43 percent for African 

Americans. This is among Medicare beneficiaries. 

This Committee already knows that life expectancy is lower 

among minorities, but the scope of the problem is less well known. 

People aged 65 to 74 are almost 50 percent more likely to die in 

the next year if they are African American than if they are white. 

We spend billions of dollars in this country to make better drugs 

and medical devices, thinking this will save lives, and indeed it 

does. But far more lives could be saved by correcting health disparities. For every life saved by medical advances, five would be 

saved if African Americans had the same death rate as Whites. 

Congress has enacted legislation to address disparities, but that 

investment is actually a small fraction of the billions we spend on 

research. Most of those billions are in the pursuit of medical advances, a worthy aim, but if correcting disparities saves more lives 

than medical advances, do we have our proportions right? 

Certainly, we must continue to invest heavily in new drugs and 

technology, but perhaps we should tip the scales a bit and make 

more substantive investment in removing barriers to receiving 

those treatments. 

Enabling all Americans to enjoy aging is not only ethical, it will 

save more lives and will go further to control the costs of medical 

care. 

With that background, let me devote my remaining minutes to 

some policy options for promoting prevention among seniors. 

I offer seven examples, but I urge the Committee to gather 

broader input from other experts, assemble a longer list of policy 

options, and choose from the best. 

We owe it to America’s seniors to pursue the most innovative and 

effective strategies to promote healthy aging. My written testimony 

elaborates on the following seven suggestions. 

No. 1, Congress should use its visibility with the public and the 

media to launch a public education campaign aimed at America’s 

seniors to emphasize prevention. Getting the message out that prevention is important to the health of seniors is the first step toward 

changing public attitudes and creating a new culture for healthy 

aging. 

No. 2, Congress should encourage the Centers for Medicare and 

Medicaid Services, CMS, to become more proactive in encouraging 

Medicare beneficiaries to adopt healthy lifestyles. My written testimony explains that existing CMS initiatives concentrate on making 

beneficiaries aware of expanded coverage benefits, but they tread 

lightly on giving health advice. Congress should encourage CMS to 

74

adopt a new role in which health advice is disseminated by CMS 

to serve beneficiaries, to lower disease burden, and to save money 

through prevention. CMS need not develop this health advice from 

scratch. Prevention guidelines for seniors and health education 

messages have already been developed by other HHS agencies, but 

are less familiar to CMS due to stovepiping. 

No. 3, looking ahead to the future, the Committee should consider how to redesign communities to support lifestyle change. It 

does little good to advise a senior to do light gardening or take a 

daily walk when he or she is surrounded by highways or has no 

safe place to walk. 

Seniors living in poor urban neighborhoods are often miles from 

a supermarket that offers healthy food choices. Fast food chains 

predominate, as do billboards that promote cigarettes and alcohol. 

Congress should work with the food industry and retailers to explore ways to promote profits and healthy customers. 

Ultimately, creating a community that fosters healthy aging requires a partnership across community sectors involving churches, 

restaurants, park authorities, senior centers, and urban planners. 

No. 4, cigarette smoking remains the leading cause of death and 

cannot be overlooked in any serious discussion of healthy aging. 

The Committee should look again at the 10 recommendations 

issued in 2003 by the Department of Health and Human Services’ 

Interagency Committee on Smoking and Health. Setting aside the 

recommendation on excise taxes, which received a cool reception, 

the plan includes nine other excellent recommendations that would 

substantially reduce the death toll from smoking-related illness 

among seniors. 

One example is telephone quit line programs, which give seniors 

access to high quality assistance in quitting smoking. 

No. 5, the failure of so many seniors to receive recommended preventive services is a symptom of a larger problem with the nation’s 

health care delivery system. Experts have warned for years that 

the quality of health care in America is in jeopardy unless bold system redesigns are undertaken. Mapping the human genome, 

robotic surgery, and other sensational breakthroughs make the 

evening news, but Congress could save more lives by directing its 

attention elsewhere. 

Take reminder systems, for example, which alert people when 

screening tests or vaccinations are due. Such systems are not glamorous, but are among the most effective ways to close the gaps in 

the delivery of health care. Yet, they are rare in our health care 

system. You are more likely to get a notice from your car dealership that it is time to change your oil than you are to be notified 

by your doctor that your mammogram is overdue. 

Our research team has shown that making such systems routine 

would save far more lives than the advances in drug therapies on 

which billions of dollars are now spent. 

I urge Congress to confront the political challenges and to press 

for modernizing the health care system to deliver consistent highquality care. 

No. 6, information technology is an important tool for healthy 

aging. Congress is already promoting electronic health records to 

improve record keeping and reduce medical errors, but information 

75

technology and web sites for seniors can do far more by empowering consumers with information to make healthy lifestyle choices, 

learn more about the tests they need, and obtain e-mail reminders 

when they are due. 

Congress should steer the health IT movement beyond its basic 

role, serving providers as a tool for patient care, to a broader role 

in helping the public maintain good health. 

Finally, No. 7, given the urgency of the problems I have discussed, Congress should increase the funding for AHRQ, the Agency for Healthcare Research and Quality, which receives one penny 

for every dollar given to NIH. Yet, it is AHRQ that has lead responsibility for all that we have discussed—prevention guidelines, 

improving the quality of health care, tracking racial disparities, developing information technology, and so on. 

Solving these problems is not a luxury on the margins of NIH. 

Without the answers, the cutting edge advances made at NIH cannot reach Americans. 

Doubling the budget of AHRQ sounds extravagant at this time 

of belt tightening. But the extra penny taken from the NIH dollar 

could go much farther in saving lives. The threat to the nation’s 

health and economy posed by the struggling health care system 

makes it risky public policy to not invest generously in tackling 

these problems. Thank you. 

[The prepared statement of Dr. Woolf follows:]

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Senator KOHL. Thank you, Mr. Woolf. 

Dr. Evans, in your testimony you describe some of the benefits 

that seniors receive through fitness and strength training, which 

includes a decreased likelihood of depression and also the ability to 

do things without the assistance of a health aid. 

Through your research were you also able to see a reduction in 

the need for prescription drugs or costly medical and surgical procedures? 

Dr. EVANS. Senator, in our studies now we see, for example, one 

of the great epidemics of aging is chronic renal failure. We have 

just completed a study, funded by the Veterans’ Administration, 

that demonstrates that we can, for example, delay or postpone or 

completely eliminate the need for dialysis through a good exercise 

and diet program. 

So while my studies are relatively small in nature, the preponderance of the evidence now, through epidemiologic studies, show 

a tremendous decrease in disability with exercise, cutting across 

the barriers. 

We know, for example, that obese older people who exercise regularly don’t have the same complications of even leaner older people 

who don’t do any physical activity. So it is a tremendous effect. 

Senator KOHL. There is a decreased use of prescription drugs? 

Dr. EVANS. Decreased use of prescription drugs. For example, 

many of our subjects come into the study diabetic, and over the 

course of an 18-month study that we have done, many of them 

don’t need insulin anymore; don’t need the anti-hyperglycemic 

agents, and that is, for example, the evidence of our Governor, who 

was diagnosed with Type II Diabetes, and this past year ran the 

Little Rock Marathon. 

So it is quite possible, and I think the important point—and 

maybe the most important point to say—is that we stand to gain 

the most from intervening in older people right now. If we want to 

save the most money, clearly, prevention programs in children and 

young people is absolutely important. But the real central message 

is that any older person, no matter how many chronic diseases they 

have, can benefit tremendously and reduce their need for both 

drugs and for social services. 

Senator KOHL. Mr. Herman, we certainly want to commend you 

for the great job that your company, Highsmith, has done——

Mr. HERMAN. Thank you. 

Senator KOHL [continuing]. In keeping health care costs down. It 

is dramatic that Highsmith’s ability to keep health care cost premiums to only 5.4 percent increase, when premiums have typically 

been increasing in the double digits year after year for most other 

business, your 5.4 percent is certainly outstanding. 

How was your company able to get your employees excited about 

changing their nutrition and physical activity? How long did it take 

before you started to see real results after the program began? 

Mr. HERMAN. Well, thank you for the question, Senator. It 

doesn’t happen overnight. It takes years, and it starts in developing 

a culture and environment that is conducive to healthy lifestyle 

choices—the little touches, from eliminating donuts and cookies at 

meetings, and instead serving fruit and fruit juices. 

88

We put into place something we call a Twinkie Tax, where we 

increase the cost of high fat food items in the vending machines, 

and use the incremental amount to subsidize the cost of the lower 

fat items. 

So just spending time and time encouraging and nudging healthy 

lifestyle choices and creating a culture that is supportive of that. 

Senator KOHL. Why are you self-insured? 

Mr. HERMAN. Why are we or are we not? 

Senator KOHL. You are self-insured? 

Mr. HERMAN. No we are not self-insured. We are in managed 

care environment, but we have a self-insured variation with our 

HMO. 

Senator KOHL. I am still not fully aware of how you are able to 

keep your increases down to 5.4 percent. It must require tremendous involvement and participation from your employees. 

Mr. HERMAN. Very much. 

Senator KOHL. Say a little bit more about what you do to get 

that result? 

Mr. HERMAN. I certainly will. 

Our premise, if you will, is if you feel good about yourself, if you 

feel good about what you do, we believe you are going to be 

healthier and more productive. You are going to be safer in the 

work environment, and you are going to stay. 

So there is a lot of influencers that come into play as to whether 

one feels good about one’s self, and there is a lot of influencers that 

come into play as to whether one feels good about what you do. 

So we try to provide resources, tools, and an environment to assist employees in feeling good about themselves. We work very 

hard in engaging employees in their jobs to get them a part of what 

they are doing. 

So we think that all comes together in promoting and helping 

employees have less health care utilization. So we have a full array 

of programming at Highsmith. We focus in from job career development, personal wellbeing, self-care, work life enrichment, and physical wellbeing. Over the years, we have just been able to make such 

significant strides that it has finally paid off for us. 

Senator KOHL. How did this program originate? 

Mr. HERMAN. Well, it originated because we had a 53 percent increase in our health insurance premiums in about 1990. So that 

certainly got our attention. It became one of our fastest rising costs 

of doing business. So we began some wellness initiatives. We started introducing monetary incentives and just over time it started 

evolving and developing. 

Senator KOHL. Did it evolve at the very top of your company? 

Mr. HERMAN. That is where it started, at the top of our company. 

Really it is the leadership by example that makes the difference I 

think in any environment. It takes that role modeling to effect 

change. 

Senator KOHL. Is there any reason why what you have accomplished cannot be duplicated throughout our economy? 

Mr. HERMAN. Oh, I think what we are doing can very easily be 

replicated. I don’t think necessarily the same types of initiatives, 

but variations. Yes, Senator, I do. 

Senator KOHL. Thank you. 

89

Mr. HERMAN. You are welcome. 

Senator KOHL. Mr. Brown, Mr. Woolf, prevention is the most cost 

effective way to stem the tide of chronic disease for the future as 

we all know. But we already have 10 million Medicare beneficiaries 

who are suffering from one or more chronic diseases. 

What more can we be doing within Medicare and other government programs to stem the skyrocketing costs associated with providing treatment for people with chronic conditions? 

Mr. BROWN. I think you need to look at those high-cost beneficiaries—as the first place where you have an immediate impact. 

One way to look at it is to imagine standing at the door of your 

hospital and watching people coming in being admitted to the hospital and saying how many of these hospital admissions could have 

been prevented if we had just known about these problems a little 

bit sooner and maybe changed behavior. I think you will find that 

probably a majority of hospital admissions certainly for chronic illness could have been prevented if they were managed and problems had been caught earlier. 

If you then go to the Health Care Utilization Project of AHRQ, 

which keeps a database of every hospital admission in this country, 

and you look through the data base sort it by disease and say who 

is admitted for what, and if you say who is admitted for a complication of a chronic condition, like heart failure, or a complication of 

diabetes or of emphysema or asthma, and you say who is actually 

paying the bills for those admissions, you will find that half of the 

hospital admissions for chronic illness are in Medicare. You find 

another 20 percent of the hospital admissions are Medicaid. You 

find a few uninsured in some other programs and then a scattering 

of health plans and other programs. You see that 50 percent is actually paid for by Medicare. 

So what Medicare does is critical in solving this problem. Medicare has traditionally not paid for anything long term. The statutes 

and the way that Medicare has been implemented, it has been 

based on paying for face-to-face encounters and episodic, not long 

term care. If you don’t pay for anything long term, how can you 

truly manage chronic illness? Because chronic illness is not episodic. It is long term. 

If you only pay for a face-to-face encounter at the hospital or a 

doctor’s office, then you are not going to be able to prevent crisis 

because you need to get to people at home before you get to the 

doctor’s office. So you have to find a way to pay for care that is remote, if you are going to prevent hospital admissions, and you have 

to find a way to pay for care that is long term and continuous, not 

episodic, if you want to manage chronic illness. 

Senator KOHL. Mr. Woolf. 

Dr. WOOLF. Thank you, Senator. I think I can use the same answer to respond to your question and the one you asked earlier to 

the gentleman from CBO about whether there is a difference between two seniors with the same disease and why one ends up in 

the pool of costing so much and the other doesn’t. As a physician, 

I think I have a different perspective than he might as an economist. 

90

We talk about primary prevention, secondary prevention, and 

tertiary prevention. I think all three represent strategies for reducing the burden of those 10 million beneficiaries. 

No. 1, primary prevention is cutting off the number of people 

who enter that chronic disease pool, so encouraging Americans to 

live healthy lifestyles, as we have discussed, reduces the incidence 

of chronic disease. It prevents the diseases from occurring in the 

first place. 

Secondary prevention is detecting the disease at an early stage, 

when its outcomes can be treated more effectively and complications can be prevented. So many of the examples that have been 

given—cancer screening tests and many other modalities—are very 

important and explain part of the reason why some diabetics end 

up in that pool of 10 million and some diabetics don’t. In other 

words, studies show that people with diabetes who have good glycemic control and their conditions are detected early have lower 

complications from diabetes than their counterparts. 

Then the third, which I think is very important is tertiary prevention. As Dr. Evans pointed out, people with existing diseases 

can have better outcomes and lower complications through pursuing healthy behaviors and good management of their diseases. 

For example, again, using diabetes as an illustration, complications 

or the progression of diabetes is cut by 50 percent through regular 

physical activity. The No. 1 killer in the United States is coronary 

artery disease. People who have had heart attacks can markedly 

reduce their risk of a recurrence or second heart attack through the 

use of certain medications, but also through healthy behaviors such 

as smoking cessation and physical activity. 

So through all three arms—primary, secondary, and tertiary prevention—we can make the difference. 

Senator KOHL. Thank you. Senator Lincoln? She is not here. Senator Talent? 

Senator TALENT. Thank you, Mr. Chairman. I really appreciate 

your putting this hearing together. You are touching on what to me 

is the essential issue regarding Medicare and I would say health 

care as a whole, both from the standpoint of relieving human suffering, which is No. 1, but also for disability. I think all the witnesses have touched on that. 

Let me ask them to address this issue, and I will have a statement for the record, Mr. Chairman. 

I think we see where you all are going and the techniques, tactics that each of you have used in your own settings, and I can certainly see why they have been effective or would be effective. 

Now, the question always for me is how do we get from here in 

the Congress to on the ground replicating in so many different settings the kind of successes or maybe, Mr. Herman, that you have 

had in an employee-employer setting, or Mr. Brown, that you have 

had in a VA setting or Dr. Woolf, in your arena. 

How do we get from here to there? I want to just suggest that 

kind of a tactic that I am more and more excited about and get 

your view on it. 

I agree about removing barriers and the rest of it. Then the question is, OK, the barrier is removed. How do you still get people to 

access the care? I am a big believer in the clinic model of commuVerDate 0ct 09 2002 13:17 Jan 13, 2006 Jkt 000000 PO 00000 Frm 00094 Fmt 6633 Sfmt 6633 H:\DOCS\24802.TXT SAGING1 PsN: JOYCE
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nity health centers, which are empowering, mediating-type of institutions that work with people face to face. You have done that as 

the employer. In other words, you have initiated this and so it has 

worked. 

Do you have any suggestions along those lines? How might we 

accomplish that as we change Medicare policy, not just saying this 

is where we want to go and this is the funding we are providing 

or the barriers we are removing, but how do we still ensure that 

somebody is getting in contact with these patients and doing these 

things? Can we rely on hospitals, who are organized also along the 

traditional medical model, for example, to do that? Do we need to 

do more than just change reimbursement incentives for them? Do 

any of you have any ideas along these lines? 

Dr. EVANS. I just might say that in most states there already is 

a well developed infrastructure for dealing with seniors. I am really 

talking about Medicare beneficiaries and those are typically senior 

centers and Triple A’s. Triple A’s are often the line that supplies 

nutrition services to older people, but often not many other services. 

We have attempted to deliver exercise programs through Triple 

A’s, and what we do is we go in and we train peer leaders, and 

they can be—just people from the community or Triple A employees—and in every place that we have done that the Triple A’s say 

well not too many people are interested in this. They get five or 

six times more older people joining these programs than they ever 

anticipated. So I think that there is a great desire of older people 

to improve their health. They know what is looming. You know, 

they don’t want to access health care dollars as much as we don’t 

want them to. They want to improve their health. They just don’t 

have access to it. 

So I think that there is an already developed infrastructure that 

we can develop delivery these programs through at a relatively low 

cost, but we need some I think political will to be able to deliver 

these types of programs. 

Senator TALENT. So you are suggesting working through Older 

American Act institutions, which would seem to be a commonsense 

first step. 

Dr. EVANS. I believe so. The infrastructure is already there. They 

have access to millions of elderly people right now. They are trusted and then working through the state agencies. Most state agencies, like Arkansas, has a Department of Health that now is interested in senior health. They have a Department of Aging that usually interacts more with the Triple A’s. So I think that instead of 

creating a new infrastructure, there is one already available. 

Senator TALENT. Anybody else have comments? 

Dr. WOOLF. I agree, although I——

Senator TALENT. If you disagree with my premise, by all means, 

say so. 

Dr. WOOLF. I don’t disagree, Senator. In fact, I think you are 

heading in the right direction. I think that we definitely need to 

provide those social support systems in order to help seniors navigate the system. The problem is that there is tremendous fragmentation in our system currently. Although Area Agencies on 

aging and other senior centers that exist in most communities are 

92

there for that purpose, as a primary care physician, I can tell you 

that there is a big divide and wall sometimes in between their 

world and the medical care delivery system, not that either one 

doesn’t want to reach out to the other, but the infrastructure for 

those connections is not well developed. 

What we really need is an infrastructure that integrates the different components of the community that need to support the senior in promoting healthy behaviors and in getting health care services. All the pieces are there, it is tying them together that is necessary. My practical suggestion: there is already work that CDC is 

doing through the STEPS Program that was initiated in recent 

years, where communities and regions around the country are testing these models for integration. Continuing to support that kind 

of innovation and creativity in communities and then extrapolating 

and generalizing those models out more broadly I think has real 

promise to tap the resources that are available in the community. 

Senator TALENT. Yes. We have been supporting through grants 

the naturally occurring retirement community program that our 

local Jewish community has been doing within its community. I 

think it is largely what you are talking about, an attempt to integrate services and service providers in these institutions that deal 

with seniors or with whom seniors interact, so that we can collect 

what is out there and send consistent and healthy messages to seniors that way. It is just so difficult to get it from our minds here 

into legislation that will then produce the right results. 

I think we are going to have to figure out some way to get the 

traditional medical providers on board and enthusiastic about this, 

and then it may naturally happen. I don’t know whether it is reimbursement changes or pilots as with the Medicare Modernization 

Act but I think it is the key to getting this idea in the community. 

Mr. Brown, it is your turn. 

Mr. BROWN. The market forces for the traditional health care 

provider world are not in the direction of prevention and reducing 

hospital admissions. They are really in the opposite direction, and 

that is one of the problems. If we go to a hospital administrator 

and say we have a program that can help you reduce hospital admissions by 50 percent, most hospital administrators look at that 

and say I am not sure that is a good idea for my business. 

We actually have worked with hospitals linked to community 

health centers and have worked with case management programs 

where nurses and case managers and social workers tried to coach 

and monitor patients at home to prevent hospital admissions, and 

those programs were at least for uninsured patients and were seen 

as cost effective for the hospital. 

But when you get to the sort of bread and butter business of a 

hospital, the business model is around the existing DRGs and codes 

and how they get paid. This isn’t in there. Prevention is not in 

there. In fact, there are a lot of disincentives for it from an economic perspective. 

If you look at the DRG and now they have designed so, you 

know, if you are readmitted within 30 days, the hospital pays the 

bill still. If you have got somebody who gets admitted to the hospital three times in a year, that is 3 months out of the year that 

the hospital worries about that patient from an economic perspecVerDate 0ct 09 2002 13:17 Jan 13, 2006 Jkt 000000 PO 00000 Frm 00096 Fmt 6633 Sfmt 6633 H:\DOCS\24802.TXT SAGING1 PsN: JOYCE
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tive, and 9 months out of the year where the hospital has really 

no interest economically in that patient. 

That is a lot of discontinuity, and that gap needs to be bridged. 

There may be ways to do this through reimbursement mechanisms 

or through tweaks of the existing way things are coded. But somehow that gap has to be filled. 

Senator TALENT. People have talked about paying for performance type, which, if you could define the outcomes that you wanted 

in the proper way so it didn’t have negative side effects, has potential because it creates an impetus within the system to produce a 

healthier result for seniors. But defining that, I think, would be difficult so that you don’t get a negative. 

Well, Mr. Chairman, I am not—I have probably trespassed on my 

time already. Thank you for calling the hearing. 

Senator KOHL. Thank you, Senator Talent. 

Senator TALENT. Thank you all for your work. 

Senator KOHL. Gentlemen, we thank you very much for your participation here today and thank you very much for your expertise. 

We appreciate very much what you have said as we continue to 

look forward to find ways to contain the growth in Medicare, primarily by helping seniors and people throughout our society lead 

healthier lifestyles. 

Thank you so much, and this hearing is adjourned. 

[Whereupon, at 11:35 a.m., the committee was adjourned]. 

(95)

A P P E N D I X 

PREPARED STATEMENT OF SENATOR JAMES TALENT

Thank you, Mr. Chairman, for convening this important hearing to examine the 

role of prevention in the Medicare program. 

I cannot over emphasize the importance of disease management services to help 

seniors live longer, more productive lives with the additional benefit of saving Medicare dollars. I have traveled all around my home state of Missouri visiting with seniors on Medicare, and discussing the beneficial disease management provisions in 

the Medicare Modernization Act, which I supported. 

Nearly half of all Americans live with chronic illnesses such as hypertension, 

asthma, diabetes, and heart disease. Approximately 78 percent of Medicare beneficiaries have at least one chronic disease, while 32 percent have four or more chronic conditions. Individuals with multiple chronic conditions are more likely to be hospitalized, fill more prescriptions, and have more physician and home health visits. 

Nearly two-thirds of all Medicare spending is for beneficiaries with five or more 

chronic conditions. 

We know that approximately five percent of the costliest Medicare beneficiaries 

consume about half of total Medicare spending. That is why I advocated for Senate 

provisions in the Medicare Modernization Act to create demonstration projects to examine disease management and care coordination for our nation’s seniors and the 

disabled. I continue to support this legislation, and look forward to next year when 

the full Medicare benefit goes into effect as I believe it will help millions of seniors 

in Missouri and across our country lead healthier lives. 

QUESTIONS FROM SENATOR BLANCHE LINCOLN FOR MR. EVANS

Question. Do adequate performance measures exist that cross multiple aspects of 

disease, such as function? 

Answer. Yes, functional capacity in elderly people is a very powerful predictor of 

mortality, morbidity, and risk of admission to a nursing home. Dr. Jack Guralnik 

at the National Institute on Aging has developed what he terms the short physical 

performance battery (SPPB) (3) that is easy to perform, even in a doctors office and 

should be used by physicians in examining their geriatric patients. The test consists 

of a 6-meter walk time, chair stand time (how long it takes to stand up from a seated position) and a balance test. Guralnik and his co-workers (2) have demonstrated 

that among nondisabled older people living in the community, objective measures 

of lower-extremity function were highly predictive of subsequent disability. Disability among elderly people is associated with increased hospitalization and a 

greatly increased cost to Medicare. These studies reveal that early identification of 

functional problems and treatment has the potential of preventing disability. The 

SPPB should be a standard component of a geriatric assessment. 

Question. How would one identify those who might benefit most from nutrition 

and exercise interventions in terms of health and cost-savings, such as certain frail 

elderly persons? And should we target these interventions to those with multiple 

chronic illnesses (including diabetes and chronic Heart Failure) to obtain the ‘‘biggest Bang for the buck’’ in our ‘‘high cost’’ Medicare beneficiaries? This secondary 

prevention approach might be easier and cheaper to implement in a smaller group 

of chronically ill seniors. If so, do you think legislation allowing for a new Medicare 

care coordination benefit, such as the Geriatric and Chronic Care Management Act 

I have introduced, achieves this goal? 

Answer. It is clear that there are a number of geriatric problems that may be 

identified before they develop into serious of life-threatening issues. There is only 

one way of identifying the potential problems in a comprehensive way and that with 

a geriatric assessment. In this way correctible nutritional problems, functional limitations, infections, over prescription of medication, and other problems may be idenVerDate 0ct 09 2002 13:17 Jan 13, 2006 Jkt 000000 PO 00000 Frm 00099 Fmt 6601 Sfmt 6601 H:\DOCS\24802.TXT SAGING1 PsN: JOYCE
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tified and treated. For example, one of the untreated diseases that occurs in elderly 

people in epidemic levels is chronic renal failure that, if left untreated, will progress 

to kidney death and dialysis. Use of certain medications and nutritional interventions can prevent kidney death and the extremely high cost and decreased quality 

of life of dialysis. Early identification and treatment of loss of appetite, eating or 

swallowing problems, or involuntary weight loss can have a powerful effect on improving life expectancy and quality of life. However, left untreated, these issues can 

have a devastating effect on the lives of elderly people. Muscle weakness and poor 

balance must be identified and treated before it leads to a devastating fall or loss 

of independence. All of these issues (and many more) would be considered secondary 

treatment. This treatment, even in those with multiple chronic diseases, can have 

a powerful effect on decreasing the cost of treatment and improving quality of life. 

The Geriatric and Chronic Care Management Act will go a long way towards implementing a comprehensive geriatric assessment that will be critical in the identification of treatable problems and the prevention of late-life disability. Ferucci et al (1) 

found that in the year when they become severely disabled, a large proportion of 

older persons are hospitalized for a small group of diseases. They concluded that 

hospital-based interventions aimed at reducing the severity and functional consequences of these diseases could have a large impact on reduction on severe disability. Thus the potential for large savings in Medicare expenses may be seen in 

the most ‘‘at risk’’ population of older people. 

Question. On symptom or consequence of sarcopenia is osteoporosis and increased 

falls, especially in women. Recent clinical trials have shown improved quality and 

decreased costs from greater falls assessment and treatment in frail elderly populations, including increase in activities as you have highlighted in your testimony. 

However, Medicare coverage of falls assessment and treatment is minimal. Perhaps 

changes to Medicare, such as the enactment of my legislation the Geriatric and 

Chronic Care Management Act, a Medicare care coordination benefit, could allow for 

better coverage of services such as these. What do you think? 

Answer. Clearly the early identification of those at greatest risk of falling and of 

developing osteoporosis is critical in preventing a devastating bone fracture. Part of 

a comprehensive geriatric assessment should be measure of functional status and 

bone density. These two simple and inexpensive assessment tools can be used to 

begin a treatment plan that is appropriate for the elderly person. For those ‘‘at risk’’ 

individuals, change in diet to emphasize increased calcium and vitamin D intake as 

well as a structured exercise program can mitigate this risk. For those identified 

with osteoporosis, a more aggressive treatment including a new generation of drugs 

to treat low bone density along with diet and exercise can prevent a bone fracture. 

We know that one of the most important nutritional factors that increases muscle 

weakness and accelerates loss of bone is vitamin D deficiency, a problem that is 

found in far to many elderly people (5) due to inadequate time in the sun (sunlight 

is used to make vitamin D by the skin) nor do they drink much milk (fortified with 

vitamin D). Balance training, including participation in Tai Chi exercises can prevent falls in elderly people Coordination of all these interventions begins with a 

geriatric assessment described in the Geriatric and Chronic Care Management Act. 

Question. This week, the Senate Finance Committee is working on ‘‘pay for performance’’ legislation which would allow for the development and implementation of 

reporting and quality based measures for greater accountability and reliance on 

quality-based health care for providers. Do adequate measures exist in the area of 

falls? Would a frail elderly/geriatric population with multiple chronic conditions benefit from some unique measures, such as a falls measure, when compared to the 

‘‘regular’’ elderly population who may be evaluated under more general measures 

having to do with one chronic disease, i.e. diabetes or heart disease? 

Answer. Adequate measures do exist in the area of falls. The short physical performance battery (described, above) is easily performed and identifies those at greatest risk of falling and suffering a bone fracture. This use of this simple tool in a 

geriatric assessment can be the first step in a treatment plan to prevent a devastating fall. This plan might include identification of medications that may cause 

balance problems, nutritional deficiencies, muscle weakness due to low muscle mass, 

obesity, and other potential causes. In fact lower extremity physical performance 

(gait speed and chair stand time) has been shown to be highly predictive of hospitalization for a number of geriatric conditions (such as dementia, decubitus ulcer, 

hip fractures, other fractures, pneumonia, dehydration, and acute infections even 

among people who are not currently disabled (4). 

References used: 

1. Ferrucci, L, JM Guralnik, M Pahor, MC Corti, and RJ Havlik. Hospital diagnoses, Medicare charges, and nursing home admissions in the year when older persons become severely disabled. JAMA;277.728–34.,1997. 

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2. Guralnik, JM, L Ferrucci, EM Simonsick, ME Salive, and RB Wallace. Lowerextremity function in persons over the age of 70 years as a predictor of subsequent 

disability. N Engel J Med;332:556–61.,1995. 

3. Guralnik, JM EM Simonsick, L Ferrucci, RJ Glynn, L F Berkman, D G Blazer, 

P A Scherr, and RB Wallace. A short physical performance battery assessing lower 

extremity function: association with self-reported disability and prediction of mortality and nursing home admission. J. Gerontol.: Med. Sci.;49:M85–M94,1994. 

4. Penninx, BW, L Ferrucci, SG Leveille, T Rantanen, M Pahor, and JM Guralnik. 

Lower extremity performance in nondisabled older persons as a predictor of subsequent hospitalization. J Gerontol A Biol Sci Med Sci;55:M691–7.,2000. 

5. Semba, RD, E Garrett, BA Johnson, JM Guralnik, and LP Fried. Vitamin D 

deficiency among older women with and without disability. Am J Clin Nutr; 

72:1529–34.,2000.

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